KENTUCKY HOUSING
CORPORATION
Closing Agent Manual
Policies and Procedures When Closing KHC
Mortgages Originated by Third Party Originators
10/14/2015
Contents
INTRODUCTION ............................................................................................................................................. 2
THIRD PARTY ORIGINATORS (TPOS).............................................................................................................. 2
INDUSTRY STANDARD DOCUMENTS............................................................................................................. 2
FEES FOR SERVICE ......................................................................................................................................... 2
WORKFLOW .................................................................................................................................................. 2
EMAIL ............................................................................................................................................................ 7
CLOSING INSTRUCTIONS ............................................................................................................................... 7
CLOSING DOCUMENTS .................................................................................................................................. 8
CONDITIONS TO DISBURSEMENT ................................................................................................................. 9
RECORDED DOCUMENTS & ORIGINAL TITLE POLICIES ............................................................................... 10
E-SIGNATURE .............................................................................................................................................. 10
DEADLINES .................................................................................................................................................. 10
KHC CONTACTS ........................................................................................................................................... 10
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INTRODUCTION
With the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the
formation of the Consumer Financial Protection Bureau (the “CFPB”), the mortgage industry is becoming
increasingly regulated. In response to this increased regulation and the CFPB’s TILA/RESPA Integrated
Disclosure Rules (“TRID”), Kentucky Housing Corporation (“KHC”) has promulgated this Closing Agent
Manual to govern, along with the Closing Agent Agreement, the relationship between KHC and Closing
Agents, who close loans originated by KHC’s Third Party Originators. This manual may be amended
and/or revised from time-to-time in order to comply with any additional laws and/or regulations, which
may be enacted, affecting the relationship between KHC and Closing Agents.
THIRD PARTY ORIGINATORS (TPOS)
TPOs are more commonly known as brokers. The minimum net worth requirement is lower than the
other four lender categories because the TPOs role is significantly diminished in comparison to the other
lender categories. The TPO originates and processes the mortgage application but submits it to KHC to
underwrite, close, fund, and perform the post-closing/quality assurance functions before the first
payment is due. Loans originated by TPOs close in the name of KHC. As a result, KHC is responsible for
hiring the Closing Agent for loans originated by TPOs.
INDUSTRY STANDARD DOCUMENTS
Closing Agent must have any and all necessary software to produce industry standard documents. Any
such software system shall be updated for any and all regulatory changes to ensure compliance with any
and all requirements of state and federal law, including but not limited to the Real Estate Settlement
Procedures Act (“RESPA”), the Truth-in-Lending Act (“TILA”) and the TILA/RESPA Integrated Disclosures
(“TRID”).
FEES FOR SERVICE
For Settlement services under this agreement/manual, KHC will compensate the Closing Agent as
follows:

$500 if the Closing Agent is also providing the Title Policy.

$700 if the Closing Agent is not also providing the Title Policy.
WORKFLOW
1) KHC Underwriting will approve the mortgage loan file for the Third Party Originator.
2) Third Party Originator will upload all required pre-closing documentation (i.e., title commitment,
homeowner’s insurance, flood certification, Loan Estimate, Termite Report, if applicable, etc.) and
will tentatively schedule the closing with the closing agent—remembering TRID timeline
requirements.
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3) KHC closer will audit pre-closing documents and request any additional documentation as
needed. Once all documents have been cleared, KHC closer will prepare the initial closing
documents and then signal system to notify Closing Agent that file is in their pipeline.
4) Closing Agent will log into KHC’s secured Closing Agent Portal using unique id and password.
5) Loan will be available in the Closing Agent’s pipeline only after KHC’s closer has completed the
initial closing documents.
6) Closing Agent will open the loan to complete information on the TRID Fees, Seller Info, and Real
Estate Agents tabs.
7)
TRID Fees: To change/update a fee, click the
icon then update information as needed. Be
sure to Edit Provider information. Click OK when complete.
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Note: Closing Agent can navigate this screen according to #’d sections or by
buckets. The Numbered sections match the former HUD-1 Settlement numbers,
for ease of use. The buckets follow the new TRID standard. Either way will
complete the necessary forms. The option is available for ease of use.
8) Seller’s Info Tab: Hit ADD button to add each seller for the transaction. Click OK when done.
9) Real Estate Agents Tab: Complete information for both Buyer and Seller Real Estate Agent. Exit
screen when done.
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10) When the TRID Fees, Seller Info, and Real Estate Agents Tabs are complete, Closing agent can
preview a “Draft” version of Closing Disclosure on the TRID Documents Printing Tab. NOTE:
Closing Agent should only view in DRAFT form until KHC’s Closer has approved the final numbers.
Opening the final version will lock in amounts. If locked in before KHC’s Closer has reviewed or
approved, the Closing Agent may be responsible for any costs to cure.
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11) When complete, Closing Agent will click the SUBMIT button to signal to KHC’s Closer that the
initial work is complete.
12) Closer will review and approve the final numbers then will mail the Closing Disclosure to the
borrower(s). When complete, KHC’s Closer will send an automated email to Closing Agent that
the closing package has been approved. Closing Agent may then print the KHC Closing Package in
preparation of the scheduled closing.
13) KHC’s Closer will also email any lender forms, invoices, etc. to the Closing Agent to add to the
Closing Package.
14) Closing Agent will print docs using two (2) tabs. The TRID Documents Printing will supply the
Closing Disclosure (Closing Agent may now print the FINAL version). The Document Printing Tab
will supply all other KHC Closing Forms.
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15) Closing Agent will refrain from closing the loan until the closing date noted on closing
instructions.
16) Closing Agent will close on the TRID-compliant closing date, in accordance with KHC’s closing
instructions and schedule.
17) If any issues arise that could jeopardize the insurability of the mortgage loan, Closing Agent shall
stop the closing and seek further written instructions from KHC prior to continuing the closing.
18) Once the loan is closed, Closing Agent shall disburse the appropriate funds to any applicable third
parties (i.e. borrower, seller, real estate agents, etc.) NOTE: if refinance, disburse funds in
accordance with refinance guidelines – right of rescission.
19) Closing Agent will return the Closed Loan Package. See Closing Documents Section.
EMAIL
Closing Agent must provide and maintain a valid email address for receiving closing documents, as well
as, establish and maintain a user name and password to retrieve the encrypted email. Any and all
changes to email addresses and email recipients shall be provided to KHC in a timely manner. BEST
PRACTICE: KHC suggests an “in general” mailbox that multiple Closing Agent staff can access in case
of absences in order to avoid KHC staff sending documents multiple times.
CLOSING INSTRUCTIONS
KHC will provide the Closing Agent with explicit closing instructions. The Closing Agent shall follow these
instructions and shall not deviate therefrom. Failure to follow any and all closing instructions shall result
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in the Closing Agent’s suspension from closing KHC loans and/or termination of the Closing Agent
Agreement. Should the Closing Agent outsource the closing function, in part or in whole, to a third
party, the Closing Agent shall be fully responsible for the performance and compliance of the third party.
CLOSING DOCUMENTS
KHC will send the closing documents to the Closing Agent via encrypted email. The Closing Agent is
responsible for ensuring that all closing documents received via email are properly printed and
otherwise handled in accordance with the requirements detailed in the Section of this Closing Manual
entitled, “Closing Documents”. All documents sent to KHC by email must be encrypted in order to
protect the borrower’s identity. Closing Agent shall maintain email encryption capability. Any and all
original promissory notes, mortgages and title policies must be shipped by Closing Agent to KHC via
overnight delivery.
Closing Agent shall exercise reasonable diligence in reviewing the form and content of any and all
documents related to the closing of any mortgage loan, including without limitation any and all first
mortgage loans and second mortgage loans, e.g. DAP loans, pursuant to the Closing Agent Agreement
received from KHC (the “Closing Documents”). Any and all documents related to the closing of any KHC
mortgage loan must be approved by KHC, including without limitation any and all Power of Attorney
forms for both seller and purchaser. Prior to loan consummation, Closing Agent shall inform KHC of any
irregularities identified by Closing Agent in the closing documents and must resolve any such
irregularities to KHC’s satisfaction. Closing Agent shall not alter the Closing Documents without written
authorization from KHC. Closing Agent shall be responsible for proper completion, execution and
notarization of the Closing Documents. Upon completion of any and all KHC loan closings, Closing
Agent shall send the executed Closing Documents to KHC, via encrypted email within 24 hours of
closing. This package shall include a copy of the note and mortgage. The original note must be sent to
KHC via secured, overnight delivery. See KHC Contacts Section for all contact information and physical
addresses for delivery.
Closing Agent shall be responsible for any and all costs of remedying any and all deficiencies in the
Closing Documents arising from or caused by the Closing Agent. Closing Agent shall promptly upon
notification, and in no event later than 30 days following notification, correct any and all deficiencies in
the proper completion, execution and notarization of the Closing Documents.
Any and all funds received by Closing Agent from KHC shall be held by Closing Agent in trust for KHC
until disbursement in accordance with the Closing Instructions. Closing Agent shall notify KHC
immediately if any condition included in the Closing Instructions is not met and funds are not disbursed
as a result of such condition not being met, and Closing Agent shall immediately return such funds in
accordance with wiring instructions provided by KHC.
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CONDITIONS TO DISBURSEMENT
Closing Agent shall not disburse to any third party any funds received from KHC except upon satisfaction
of any and all conditions to closing set forth in the Closing Instructions, including without limitation any
and all conditions to the issuance of title insurance as specified in the Closing Instructions.
Any deviation from any standard set forth herein must be approved in advance by KHC in writing.
However, the Closing Agent may, in good faith, rely upon a facsimile transmission or email message
reasonably believed by Closing Agent to be an authorized communication from KHC. Such facsimile or
email message must provide clear approval of the deviation from standards prior to such deviation
being taken. If Closing Agent has questions or concerns regarding Closing Instructions, the Closing Agent
shall contact KHC for clarification.
The following is a list of KHC’s requirements for Title Commitments and Final Policies, in addition to
industry standards.
1)
Closing Agent shall have a valid contract with a title insuring agency;
2)
All Title Commitments shall include property tax information and current assessed value of
the property;
3)
All Title Commitments shall list KHC as the proposed insured and include MERS language (See
Paragraph 5);
4)
An insured closing protection letter shall be required for each individual borrower with each
title commitment signed by the Closing Agent.
5)
All Final Title Policies shall be original Short-Form Title Policies:
a. Naming as the Insured: “Kentucky Housing Corporation and Mortgage Electronic
Registration Systems, Inc. solely as nominee for the Lender, its successors and assigns,
as their interests may appear.”
b. Date of Policy: “[Date of Closing] or date of recording of insured mortgage, whichever is
later.”
c. Mortgage Recording: If mortgage recording information is shown on the title policy,
then all recordings of the mortgage shall be listed.
6)
ALTA Endorsements: All Title Policies must have the 8.1-06 Environmental Protection Lien
Endorsement as well as any of the applicable choices:
a. 7-06 or 7.1-06 Endorsement for all manufactured homes,
b. 4-06 or 4.1-06 Endorsement for all condos,
c. 5-06 Endorsement for all PUDs.
7)
All policy jackets shall be included with final title policy. All pages of any final title policy must
include executed signatures, where applicable, as well as, ALL PAGES of final title policy and ALL
schedules.
8)
All KHC first- and second-mortgage shall be recorded within 30 days of the corresponding title
commitment being issued for said mortgages;
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Note: Although KHC strongly prefers the Closing Agent to write the Title Commitment and Final Policy,
KHC will accept a third party title policy from the Third Party Originator with prior, written consent and
provided the Third Party Originator is not under KHC suspension.
RECORDED DOCUMENTS & ORIGINAL TITLE POLICIES
Final security documents (i.e. recorded mortgage and/or any affidavit of mortgage amendments) and
the original title insurance policies are due to KHC within 45 days of closing. Any and all mortgages are
to be sent for recording within 7 days of closing. If any mortgage is not recorded within this time frame
KHC may request a title update at no cost to KHC and Closing Agent shall be responsible for any and all
costs related to resolution of any title issues resulting from the mortgage being filed outside of the 7 day
deadline, including without limitation any and all attorneys’ fees.
E-SIGNATURE
Any and all e-signed documents provided to KHC by Closing Agent shall have been e-signed in
conformance with any and all federal, state and local laws and regulations governing e-signatures, as
well as, any and all policies and procedures of the Federal Housing Administration (FHA), USDA’s Rural
Housing Service (RHS), U.S. Department of Veteran’s Affairs (VA) and Fannie Mae. Notwithstanding
anything contained herein to the contrary, no Note and no Mortgage created pursuant to this
Agreement shall be e-signed.
DEADLINES
Closed loan package must be returned to KHC:
Within 1 business day of closing.
Original note(s) and escrow checks due to KHC:
Within 24 hours from closing date with
closing package.
Mortgage(s) must be sent for recording:
Within 7 calendar days of closing.
Final Recorded Mortgage, Final Title Policy (originals) to KHC:
Within 45 calendar days of closing.
Correction of Deficiencies to KHC:
Within 15 calendar days of notification.
KHC CONTACTS
Questions regarding TPO closings should be directed to:
Michele Byer at: mbyer@kyhousing.org or 502-564-7630 ext. 426 or email to closing@kyhousing.org.
KHC’s Shipping Address for Original Note, Recorded Mortgage, and Final Title Policies:
Kentucky Housing Corporation
Attn: Single-Family Closing & Quality Control Team
1231 Louisville Road
Frankfort, KY 40601
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